Site Dissatisfaction and Challenges in Clinical Trial Financial Management

The Clinical Financial Blog was created to address the complexities that are encountered with financial management of clinical trials. With a lot of critical financial requirements still not fully understood and addressed, we’ve got you covered. Medidata’s team of experts, who have lived and breathed the budgeting and site payments processes, will provide first-hand experiences, sharing knowledge and recommendations they’ve built over many years of direct experience with sponsors, CROs, and sites. This month’s topic covers clinical trial investigator grant forecasting.

Why are clinical trial sites often dissatisfied?

Let’s pretend you have a paycheck that supports your family. You accept a job for an agreed-upon compensation rate. On your first day, you are told that your first paycheck won’t be paid until after you have completed the first 90 days of work. Perhaps you didn’t catch this in the fine print of your job offer, but your work is important to you. You know it’s making a difference for people, so you push through the first 90 days, completing all the required assignments.

At day 91, your new employer asks you to fill out a timecard with line-item detail for everything you worked on, down to the individual widget number. You spend the next two weeks combing through all your notes and the software you use to reconstruct a timecard that accounts for everything you did for the last 90 days.  You submit it to the powers that be and wait -- and then wait some more.

On day 110, your employer tells you that your manager must now review all your work on the timecard to ensure you didn’t make any mistakes. You are beginning to get really annoyed!  Where is the communication and transparency? Once your manager validates your work, on day 120, you feel confident that you will finally get paid.

On day 150, your deposit finally shows up, but for significantly less than you expected with no detail to explain the calculations. You know your deposit is probably wrong but you aren’t 100% sure why. When the employer finally provides the detail, around day 175, you find out that they withheld 10% of the gross compensation, which will be returned to you on your last day of employment, once you complete their checklist as a safeguard for any mistakes you may make during the course of your employment. This doesn’t stop within a training period. It will continue through the course of your time with them.

If you are thinking “something like this never happens” (spoiler alert: It does!) or “well, I would obviously resign,” now you are beginning to understand why a site may never re-engage on another clinical trial ever again.

What are some of the biggest challenges in clinical trial financial management?

In the U.S., outside of the construction industry, the clinical trial industry has some of the worst payment terms for payees. This includes longer net terms (i.e. the time a sponsor or CRO has to pay the site’s invoice), retainage or holdback (sometimes with no limits), clinical trial payment upon subject data verification, and long lead times between site initiation visit and first payment are just a few of the reasons. My friends outside the U.S. don’t have it much better.  As they must invoice for everything, the sheer burden of that process has resulted in them accepting quarterly payment terms because they need that long to prepare their invoices anyway.

Policies such as forced retainage, which ranges from 5%-20%, with or without a limit, came into existence when the industry was paper-based as a norm. Mistakes were commonplace when a site or sponsor had to dig through paper case report forms (CRFs) to determine what was payable, so money was commonly withheld to protect the sponsor as once cash is paid out, it’s always very hard to get it back (not unique to our industry!). However, although there are some of you out there still clinging to paper, most of the industry has moved on to eCRF data entry where checks and validations occur in real-time. In fact, studies have shown that less than 2% of all study data gets changed at a monitoring visit and even then, not all of those changes would have impacted a payment. Yet, the practice remains.

Likewise, payment terms over time have moved away from what used to be a relatively standard net 30 to net 45, 60 or even 90.  While this allows for better cash flow management from the sponsor’s side, it’s absolutely crippling to a site where these funds most often represent payroll and keeping the lights on, so to speak.

What can be done to support clinical trial sites?

Automation, Automation, Automation – Data should be entered once and then actioned as needed where needed. Take a platform approach to the solutions in your ecosystem where data is easily shared, actionable and reportable. There is no reason in this day and age why any site should be expected to perform manual invoicing.

Communicate – Survey your sites proactively to see whether you are meeting their expectations. Get a handle on where their frustrations are. There are a finite number of research sites in the world and if as a sponsor, you get a reputation for being difficult to work with or late to pay, your world of sites is going to be a subset of those global sites which will grow increasingly smaller as time goes by.

Pay them – It may sound obvious, but sites who are paid timely AND accurately tend to be happy and are a natural extension of your team and the face of your organization to your patients. Take a fire extinguisher to those fiery hoops!

What can everyone start doing now?

Evaluate your accounting terms – If you wouldn’t be willing to wait for your paycheck personally the way one of your sites must, perhaps it’s time to push back on accounting and finance. Extended net terms have a place between vendors but most sites don’t work with the huge cash reserves that your larger vendors do. If you are using automation to its full advantage, aim for “Paid Upon Receipt.”

Take a hard look at retainage – Sponsors and CROs alike have all the data at their fingertips to know which sites perform and which do not. Once a site is established with your team, eliminate holdback. Better yet, take a hard look at your monitoring data and see if it’s even needed at all.

Provide the right tools – If you are still pushing paper, whether it’s CRFs or invoices, there are automated options out there. Sure, they cost money but do the analysis of how many hours are being wasted by your internal teams (and your sites). The return on investment will be apparent. Allow your resources to focus on higher-value activities. Your sites will be happier, your internal team will be more productive, and your studies will operate more efficiently.

Learn more about clinical trial site payments and financial management with Medidata

About the Author:

Nicole Montgomery, Product Marketing Director, Clinical Trial Financial Management

Nicole Montgomery is the Product Marketing Director for the suite of Clinical Trial Financial Management products at Medidata Solutions. She has spent the last 14 years of her professional career working within the life sciences industry with a primary focus on technology, and the investigator grant budgeting and payment processes. She has worked for several technology and service provider companies within the industry in a variety of roles that includes client services, operations, implementation, training, sales and marketing. She holds a B.S. in Finance from Rutgers University.